On Monday, December 4, 2017 the United States Supreme Court began hearing legal arguments in Christie v. National Collegiate Athletic Association (NCAA) concerning New Jersey’s attempt to change its laws to permit gambling on professional and college sport events in Atlantic City casinos and at the state’s horse racing tracks.

Background and main arguments

While the case has a long five-year legal history, and involves multiple decisions at various legal levels (see Christie I4 and Christies II5), New Jersey’s main argument in the United States Supreme Court is whether PASPA violates the Tenth Amendment to the United States Constitution, which provides that

“[t]he powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”6

In particular, New Jersey claimed that before passage of the PASPA, Congress had traditionally let individual states regulate gambling within their own jurisdictions. In taking this hands-off approach, New Jersey claims that it is up to the individual states, not the Federal Government to regulate gambling.

In ruling that PASPA does not violate the Tenth Amendment, the courts found that the Tenth Amendment only prohibits Congress from requiring the States to engage in affirmative activity.7 The Tenth Amendment does not prevent Congress from prohibiting a State from enacting legislation in an area in which Congress had made its will clear.8 “Here, Congress has acted through its enumerated powers under the Commerce Clause and determined to control sports betting to the exclusion of the States (except to the extent that several states have been grandfathered in).”9 Through PASPA, the court held that Congress has chosen to limit the geographic localities in which a sport wagering is lawful. It does no more or less. As such, the Court concluded that PASPA does not usurp State sovereignty.10. This construction of PASPA is both constitutional and reasonable. Therefore, the Court concluded that there was no legal justification to hold that PASPA violates the Tenth Amendment.11

In addition, the court held that State authorized sports wagering cannot reasonably be described as purely pertaining to the internal policies of a state. Because sports wagering's effects are felt outside the state, and the ability to regulate gambling is within the purview of Congress, Congress' restriction of such does not violate or constrain any "attributes essential to [New Jersey's] equality in dignity and power with the other states.”12

In upholding the ruling of the lower court, the Third Circuit concluded that the state could not regulate sports betting without running afoul of the PASPA. However, the appeals court held that the states retained “much room . . . to make their own policy” and were free to “enforce the laws they choose to maintain.”13

Seeking to comply with the Third Circuit’s decision, New Jersey passed a 2014 law that “partially repeal[s] the prohibitions, permits, licenses, and authorizations concerning wagers on professional, collegiate, or amateur sports contests or athletic events.”14 The sports leagues once again challenged the new law under PASPA. In rejecting New Jersey’s new law, the Third Circuit held that “a [S]tate’s decision to selectively remove a prohibition on sports wagering in a manner that permissively channels wagering activity to particular locations or operators is, in essence, ‘authorization’ under PASPA.”15

Having lost again at the Third Circuit, New Jersey tried one last time with the Supreme Court. Before deciding the case, the Supreme Court asked the United States Solicitor General for the government’s opinion on the law. Acting Solicitor General Jeffrey B. Wall said New Jersey did not have a case and that the state's effort to get around the federal ban on sports betting by repealing state laws prohibiting such wagering and allowing it to proceed without regulation "is no different than a positive enactment authorizing such gambling."16 The Supreme Court, however, rejected the Solicitor General’s opinion and agreed to hear the case.

Potential impact of the case

Presently in the United States, betting on individual games is only allowed in the State of Nevada. The most popular sporting event to bet on is the NCAA Basketball Tournament. According to the Nevada Gaming Control Board, a record $439.5 million was bet at the state’s sports books on basketball during March of 2017, of that amount over $300 million was bet on the NCAA Basketball Tournament.17 While large, that amount is only a small amount of the total money bet during the tournament, the American Gaming Association estimates that around $10 billion was illegally wagered during the 2017 NCAA Tournament.18 Besides the NCAA Tournament, the National Football League’s (NFL) Super Bowl also attracts heavy betting, with approximately $1398.5 million wagered on the 2017 Super Bowl at sports books across Nevada’s 196 sports books.19 In addition to the money bet legally in Nevada, the American Gaming Association (AGA) estimated that Americans annually bet around $140 billion on sports illegally.20

Most commentators believe that the United States Supreme Court is going to overturn the law and rule that PASPA does violate the Tenth Amendment, at least as applied to New Jersey’s law. The bigger question, however, is what will be the impact of such a decision by the court.

First, with bettors no longer required to flock to Las Vegas for every big sporting events, New Jersey’s casinos should see an uptick in traffic. In addition, with all the extra bets being waged in New Jersey, the state should see an increase in tax revenues. The actually increase, however, could be offset by additional competition. For example, one organization predicts that in New Jersey wins its case at the Supreme Court it will set in motion the development of sport wagering markets that by 2025 would span between 21 and 37 states.21

As for the leagues and their concerns that increase sports betting would have a negative impact on their games, even the league commissioners can see the glaring hypocrisy in their position. In November 2014, NBA Commissioner Adam Silver made waves when he wrote aNew York Times article in which he argued that Congress should legalize regulated sports betting in the United States.22 Silver argued that "[g]ambling has increasingly become a popular and accepted form of entertainment in the United States," and pointed to the "thriving underground business that operates free from regulation or oversight" as further support for his position that there is "an obvious appetite among sports fans for a safe and legal way to wager on professional sporting events."23 MLB Commissioner Rob Manfred has also reportedly made statements in support of sports betting that, "while more tempered than [Commissioner] Silver's, are still a stark departure from baseball's long-held anti-betting stance."24

Copyright notice

Th​is work was written for and first published ​on LawInSport.com (unless otherwise stated) and the copyright is owned by LawInSport​ Ltd​. Permission to make digital or hard copies of this work (or part, or abstracts, of it) for personal​ use​ provided copies are not made or distributed for profit or commercial advantage, and provided that all copies bear this notice and full citation on the first page (which should include the URL, company name (LawInSport), article title, author name, date of the publication and date of use) of any copies made. Copyright for components of this work ​owned by parties other than​ ​LawInSport must be honoured.

About the Author

John Wolohan is an Attorney and Professor of Sports Law in the Syracuse University Sport Management program and an Adjunct Professor in the Syracuse University College of Law. In addition to being one of the lead editors of the book "Law for Recreation and Sport Managers" by Cotten and Wolohan, John has been teaching and working in the fields of doping, antitrust, gaming law, and sports media rights for over 25 years.

This email address is being protected from spambots. You need JavaScript enabled to view it.